Cooling measures – Maximum tenure for HDB housing loans cut to 25 years

THE BUSINESSTIMES – THE Singapore government will reduce the maximum tenure for public housing loans to 25 years from 30 years  in a series of measures to stabilise the resale market.

Cooling measures

Cooling measures

The mortgage servicing ratio limit will also be reduced from 35 per cent to 30 per cent of the borrower’s gross monthly income, the Ministry of National Development and the Housing & Development Board said in a statement on Tuesday, 27/8/2013.

“These measures are in line with those introduced by the Monetary Authority of Singapore (MAS) to encourage financial prudence among borrowers, which is especially important given that the current low interest rate environment is unlikely to be sustained,” according to the statement. < VERY BIG HINT that interest rate is going up soon. >

The MAS will reduce the maximum tenure of new housing loans and refinancing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) to 30 years from 35 years. New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter loan-to-value limits

Still can’t figure out how much it affect HDB buyers? Let’s take an example of a couple having a HDB loan of $400,000 for 30 years at a interest rate of 2.6%. Their current monthly installment will be around S$ 1,601.36.  But with the new cooling measures, buyer can only take a maximum of 25 years public housing loan instead of 30 years, their monthly installment will be S$ 1,814.68 instead. An $213.32 or 13% increase in monthly installment. Well the $213.32 is enough to pay for your monthly utilities bill. 

Meanwhile, with immediate effect , Permanent Residents (PR) who want to buy resale HDB flats will have to wait three years after receiving their PR status. Prior to this change, they could buy a flat as soon as they received PR status. This is indeed a big blow for PR holder. Will this measures push new PR holders to go to private residential market? Hmm , we shall see.

What’s very sure is that the HDB resale market will be damn COOL this 2 months due to the knee jerk effect.

Source – http://www.businesstimes.com.sg/breaking-news/singapore/maximum-tenure-hdb-housing-loans-cut-25-years-20130827

https://www.todayonline.com/singapore/hdb-shortens-homebuyers-loan-tenure-25-years

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7 responses

  1. […] Cooling measures – Maximum tenure for HDB housing loans cut to 25 years (paulngproperty.wordpress.com) […]

  2. […] A lot of sellers are still asking for high COVs despite the fact that the buyer pool is shrinking because of the January cooling measures , the ramp up in BTO (Build-to-Order) supply, the new TDSR policy, and the latest cooling measures by HDB implemented on 27th August 2013.   […]

  3. […] Data from Singapore Real Exchange (SRX)  showed that Punggol’s executive flats had the lowest cash-over-valuation (COV) by region. Two out of the three transactions there in August were sold below valuation, while the median COV was $13,000 below valuation. – Straits time. How long did we heard this word , BELOW VALUATION?  It seems like the interest for big units have subsided. Might be due to the TDSR and the new cooling measures announced on 27/8/2013. […]

  4. […] Cooling measures – Maximum tenure for HDB housing loans cut to 25 years (paulngproperty.wordpress.com) […]

  5. […] more dips in COV in the next few months. This is due to the recent cooling measures, and massive launch on HDB BTO flats by HDB. It seems like mortgage servicing ratio limit is a […]

  6. […] Straits Time, HDB. You may be interested –  Singapore Market’s Cooling measure Maximum Tenure for HDB housing loans Cut to 25 Years COV going South again Home price could dip by End 2015 More HDB resale with ZERO […]

  7. […] in HDB resale price is expected due to the many measures imposed by the government especially the mortgage servicing ratio of 30 per cent and also the maximum loan term of 25 years which I have mention in my previous blog entry in Aug 2013.  This measures reduce the […]

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